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Election 2019

Employment Insurance, a Critical Safety Net, Is a ‘Pale Shadow’ of Its Past. Who Will Fix It?

On the cusp of possible recession, it’s a big issue. What have the parties promised?

Andrew MacLeod 4 Oct 2019 | TheTyee.ca

Andrew MacLeod is The Tyee’s Legislative Bureau Chief in Victoria and the author of All Together Healthy (Douglas & McIntyre, 2018). Find him on Twitter or reach him at

One of the last things political scientist Donna Wood did before she died was write a report on Canada’s Employment Insurance program and how it could be improved.

She wanted a full review of the program, as well as major reforms on a scale far beyond what any of the parties campaigning in the current election have proposed.

As Chris Roberts, the director of the Canadian Labour Congress’s social and economic policy department, observed in an interview, “There have been some very targeted announcements with regards to special benefits, maternity-parental benefits, for specific political reasons.”

But a broader vision has been missing.

“With respect to the overall intent of the program and the deficiencies in the program... there’s been less attention,” Roberts said. “In terms of a holistic discussion about the adequacy of EI today, as we may be on the cusp of the next recession, I think the discussion has been somewhat wanting.”

Considering some 450,000 Canadians are receiving benefits from the program at any given time and millions of workers are paying into it, plus the role it plays in the labour market and the broader economy, the lack of attention is surprising.

“Like Medicare, EI is highly valued by Canadians as part of our social safety net,” Wood wrote in her report Employment Insurance: Next Steps on the Road to Renewal. “It is an expression of our willingness to share risk and take care of each other during work disruptions.”

And yet the program had been severely diminished, she found in the January 2019 report written for the Atkinson Foundation. “EI has been in decline since 1990, when the Government of Canada stopped contributing money to the program, leaving all costs to employers and workers,” Wood wrote.

At the time there were worries from the Organisation for Economic Co-operation and Development and other experts that the program contributed to “structural unemployment” and created “disincentives to work,” she said.

The Canadian government responded by making a series of cuts that restricted access, decreased benefit amounts, reduced the length of time for which benefits could be claimed, and lowered premiums.

Those cuts had a serious, long-term impact, she wrote. “Almost three decades later, the benefits that unemployed workers receive from Employment Insurance are a pale shadow of what was available in the past.”

Wood, who worked many years in social services before returning to school later in life, was an adjunct professor in political science at the University of Victoria and the author of Federalism in Action: The Devolution of Canada’s Public Employment Service 1995-2015, which compares how different provinces have managed employment services.

A few months after her Employment Insurance report came out, she died of breast cancer at the age of 70.

According to her obituary, “As both a civil servant and academic, her life goal was to make a difference to the poor and unemployed by studying how Canadian tax dollars could be best used to help them.” It also notes that her community involvement in Victoria included a role on the federal Liberal party executive in the riding.

In the report on EI, Wood identified six challenges:

  1. Coverage: There is a gap between those who are eligible for EI and those who need it.

  2. Variable entry requirements: There are regional inequities in eligibility for the program.

  3. Adequacy: Benefits are inadequate to meet workers’ needs during a jobless period.

  4. The impact of re-distribution: Some regions and industries contribute more and benefit more than others. This undermines solidarity toward the program as a whole.

  5. Discrimination: Many workers pay into the program but cannot ever draw benefits from it.

  6. Governance: The representatives of workers and employers — the people who finance the program — have been sidelined in the decision-making process.

Thanks to the cuts that started in the 1990s, Wood wrote, “Today, workers and their advocates often describe the program as irrelevant because benefits are so low and the barriers to access are so high.”

Two policy changes in particular had significantly reduced the number of people who could claim EI benefits.

One was the disqualification of people who quit their job voluntarily or who were fired for cause, and the other was changing the eligibility criteria from the number of weeks worked to the number of hours worked, a switch that excluded many part-time workers.

“These access changes were particularly hard on women who, more than men, leave their jobs for family reasons or to avoid workplace sexual harassment. In addition, far more women work part time and therefore qualify for benefits less often under the new rules,” she wrote.

Wood added, “The next step in modernizing EI is a broad-based and fundamental review.” She envisioned a public inquiry that would take into account the program’s history, its core values, how the employment market had changed and how EI could better meet today’s needs.

“People in precarious jobs in provinces with low unemployment like Ontario pay endlessly into a program that offers them little or no hope of ever deriving a benefit,” she wrote. “A growing number of workers in the gig economy do not have any kind of protection against the risk of unemployment. People who paid into EI for more than 10 consecutive years tell stories of missing meals while continuing to pay into EI. These workers simply do not obtain sufficient insurable weeks.”

The result was fundamentally unfair in a way that hurts people who are already struggling.

“Paying into an insurance program where there is no chance to derive a benefit is one thing,” Wood wrote. “It is quite another thing for this to be the case for workers who are the poorest, those who are hurting the most and yet asked to continually fund this program for people who are demonstrably better off than they are.”

She noted that in 2015, newly elected Prime Minister Justin Trudeau had mandated the minister in charge of the program to conduct such a review, but it hadn’t taken place by the time her report was released this year. Nor has it happened since.

It had been a long time since the program had been given a major overhaul, Wood said. “The evidence suggests a significant retraction since the 1990s and a clear need for reform as we move into the 21st century. All that remains is to marshal the political will and public support to mark 2019 as the next milestone for EI — and as the year Canadians renewed their collective capacity to face the future of work.”

What parties propose

With the election campaign well underway, each of the main parties has at least mentioned Employment Insurance and begun to outline their ideas for the program.

The Green Party acknowledges the need to make changes to the program but lacks specifics. According to its platform, “We are overdue to modernize our Employment Insurance program to better meet the needs of today, including through portability of benefits.” It provides no further details.

The Conservative Party is yet to release its full platform, saying that won’t happen until Oct. 11, but it has announced that a Conservative government would end the practice of charging income tax on EI maternity and parental benefits.

The Liberal Party has several promises related to EI scattered throughout its platform, but nothing that could be construed as a full review or major reform.

Proposals include introducing a “Guaranteed Paid Family Leave” that would “make sure that parents who don’t qualify for paid leave through Employment Insurance, or who don’t get enough because they’re between jobs, earn little, or haven’t worked enough hours, will receive a guaranteed income during the first year of their child’s life.”

The promise appears to acknowledge the shortcomings of EI, as does the Liberals’ proposed “Career Insurance Benefit” that would “kick in after Employment Insurance ends, providing an additional 20 percent of insured earnings in the first year following the layoff, and an extra 10 percent in the second year.”

The party would also extend EI sickness benefits to 26 weeks from the current 15; continue a pilot project that gives “more consistent and reliable benefits” to workers in seasonal industries like fish processing and tourism; and introduce an “Employment Insurance Disaster Assistance Benefit” that would “help replace the income that is lost when families need to temporarily stop working to protect their homes, or because they need to relocate to safety.”

The NDP, which traditionally has close ties to the labour movement, dedicates page 20 of its platform to making EI improvements. Commitments include:

In its platform the NDP notes that fewer than 40 per cent of workers now qualify for benefits when they need them and that the portion of unemployed women who qualify is even lower. “The Conservatives brought in mean-spirited changes to EI that hurt workers, families and communities — and the Liberals have tinkered at the edges, rather than improving the system for all,” it said.

Roberts from the Canadian Labour Congress said that while the platforms were “uneven” on employment insurance, some of the proposals are far reaching. “The Conservatives and Liberals, they’ve fashioned very targeted improvements to appeal to certain categories of workers and possible voters, and the NDP is casting its net a bit broader.”

The biggest problem is access, he said. As recently as the late 1990s, some 80 per cent of unemployed workers had access to EI benefits. Now it’s down around 40 per cent, and as low as 20 per cent in centres like Toronto with low unemployment. Low-wage workers are particularly unlikely to be able to draw benefits, he said.

“There all kinds of inequalities introduced through that system that don’t really make a lot of sense,” Roberts said, noting that urban centres with low unemployment rates also tend to be home to a large proportion of people who have immigrated to Canada. “If you’re unemployed in a high unemployment region or a low unemployment region, there may be other impediments that you face to getting a job beyond simply what the unemployment rate is in your region.”

The CLC has advocated for a single qualifying threshold of 360 hours of work that would apply everywhere in the country, which is what the NDP is promising.

For those who qualify, adequacy is a problem at both the low end and for upper income earners. “It just pays too little in terms of benefits. For low income earners, 55 per cent of their low income is going to be just too little to live on.” For higher earners, the program provides a maximum of $562 a week.

The CLC has long advocated for increasing payments to 60 per cent of a worker’s income, which again the NDP’s platform aligns with.

The labour organization would also like improvements to the Canadian Training Benefit to allow higher payments for a longer period of time when people decide to upgrade their skills. And regular EI benefits should be available for 50 weeks, Roberts said.

“It should be extended so that nobody exhausts their benefits, but rather can draw benefits as needed.”

Like Wood, the labour movement would like to see an open review of the program, Roberts said. Over decades there have been a mix of dramatic reforms that have affected benefits, eligibility, financing and governance of the program, but also many incremental, targeted changes.

“There are now so many accumulated problems in the EI program, we would argue, that a full scale review to assess all of the weaknesses in the program and the way in which the various features now interact with one another, to address them in a coherent and integrated fashion, makes a lot of sense.”

Changes made in the 1990s were supposed to include a shift to more focus on skills training and employment services, but today Canada still spends far less on those areas than peer nations do, Roberts said. “In fact, what we’ve seen is a real crisis for precarious, non-standard workers, low-paid workers, and a feeling that unemployment insurance is irrelevant for many workers, not just at the bottom of the earnings spectrum but also at the top.”

There are fixes that are so obviously needed that they shouldn’t be delayed, he added. “We would say there are so many crying problems with access to EI regular benefits in particular that we would advocate immediate action to improve access to the program, especially on what might be the cusp of a downturn.”

The program was originally set up to accumulate surpluses in good years and spend them when unemployment rises, helping to stabilize both the labour market and the wider economy.

A program that only pays benefits to four out of 10 unemployed workers won’t provide that kind of buffer, Roberts said. “The greatest fear is we go into recession... and you’ve got big chunks of workers across the board... who can’t get the support that they need and are falling into social assistance or eliminating their RRSPs or borrowing further into debt. That’s the biggest problem here.”

He said, “The first order of business should be to make it recession ready and allow the program to fulfill its original intent.”

So far that’s something that none of the people campaigning to be prime minister are talking about with the Oct. 21 election day approaching quickly.  [Tyee]

Read more: Election 2019

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